Norse Atlantic Reports Huge Loss: Can The Airline Be Profitable?

Norse Atlantic Reports Huge Loss: Can The Airline Be Profitable?

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Norse Atlantic Airways is a long haul low cost carrier that launched in 2022. The airline exclusively flies Boeing 787s, and primarily operates transatlantic flights. Being a profitable low cost long haul carrier can be challenging, especially in highly seasonal markets, like across the Atlantic.

The airline has just reported its financial results for 2023, so I figured it’s a good time to check in how the airline is doing. Unfortunately the answer is “not good,” though I don’t think that will surprise anyone. Nonetheless, executives at the airline remain optimistic.

Norse Atlantic reports 2023 financial results

Norse Atlantic has reported its financial results for 2023:

  • The airline had $439 million in revenue, and had a net loss of $169 million; as a point of comparison, in 2022 the airline had $104 million in revenue, and had a net loss of $175 million
  • The airline had an average load factor of 74% in 2023, compared to 62% in 2022
  • The airline had total revenue per passenger of $387 in 2023, compared to $262 in 2022
  • The airline had total cost per air seat kilometer at 6.63 cents in 2023, compared to 9.22 cents in 2022

As you can see, Norse Atlantic saw significant improvements in 2023 compared to 2022. However, even so, a negative margin of 38% is pretty awful.

Despite these results, executives at the airline claim they “now see a clear path to profitability on a year-round basis.” It’s noted how sales to date for the 2024 summer season are up 80% compared to the same period in 2023. Furthermore, charter revenues booked and under negotiation far exceed charter revenues achieved in 2023 (for example, Norse Atlantic will operate a flight between Lagos and London on behalf of Air Peace).

Norse Atlantic executives claim that they’ve learned lessons from 2023 as they plan their summer and winter 2024 schedules. The following are the priorities for the airline:

  • Careful route selection
  • Capturing unreleased fare potential
  • Increasing load factor
  • Developing further business opportunities with cargo and charter operations

Furthermore, Norse Atlantic’s plan is to further focus the winter season on pursuing charter opportunities, while operating its own schedule in summer.

Norse Atlantic reported a significant loss for 2023

Can Norse Atlantic become profitable?

Obviously the situation at Norse Atlantic is improving, which is to say that the numbers look much better for the carrier’s second year of operation than the first year of operation. However, even with those improvements, the airline is still a long ways from being profitable.

Norse Atlantic executives are saying the right things. I mean, some of these points are pretty obvious — hopefully “careful route selection” is always something that airlines do.

But the challenge is that running a long haul low cost carrier in a seasonal market isn’t easy. As many are probably aware, the Norse Atlantic business model isn’t unique.

In 2021, Norwegian discontinued its long haul flights, as the airline was hemorrhaging money on those routes, and was on the verge of liquidation. Yet Norse Atlantic is essentially a reincarnation of Norwegian, with exactly the same aircraft, many of the same executives, and some of the same routes.

It’s easy to make money flying across the Atlantic in summer, since demand is nearly endless. The challenge is what you do for the nine non-peak months of the year, when demand is much more limited.

Yes, trying to lease out aircraft to other airlines makes sense, but the challenge is that the aircraft needs for other airlines largely overlap with when Norse Atlantic wants to operate its own schedule, in summer. There are airlines that are successful wet lease operators, like HiFly. But that’s their focus, rather than it just being a side hustle.

I have a lot of respect for the people at Norse Atlantic, and I know they started the airline with a great cost structure, as they reportedly got amazing deals on the 787 leases, at a time when travel demand was depressed. Even with a good cost structure, it doesn’t change the fact that running a transatlantic low cost carrier is no easy task. Yet somehow it’s an idea that is tried over and over and over again.

Norse Atlantic is basically Norwegian 2.0

Bottom line

Norse Atlantic reported a $169 million loss for its first full year of operation in 2023, on $439 million of revenue. This is a significant improvement over the carrier’s financial results in 2022, though the airline is still far from being profitable.

Executives at the airline claim they see a path to profitability, though I just see Norwegian 2.0. I’m curious how the next year plays out…

What do you make of Norse Atlantic’s prospects?

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  1. KingBob Guest

    I flew them last summer one way LGW-MCO and they were perfectly fine. Left on time, arrived on time, friendly FA's, really no different than flying VS or BA as my price included 1x Bag and 1X Meal. But a lot less money.

    The main thing though was all the big boys would not sell me a 1 way ticket without gouging me. The one way prices were more than buying a return ticket which...

    I flew them last summer one way LGW-MCO and they were perfectly fine. Left on time, arrived on time, friendly FA's, really no different than flying VS or BA as my price included 1x Bag and 1X Meal. But a lot less money.

    The main thing though was all the big boys would not sell me a 1 way ticket without gouging me. The one way prices were more than buying a return ticket which left me with the choice of buying a return ticket and throwing the return part away. I know, against their rules.

    So I went with Norse. I hope they survive!

  2. John Macmillan Guest

    The problem is they have no short haul connecting flights so they have to fill their planes from the local catchment area. By the time you buy connecting flight with easy jet you have to add a bag and seats etc it is way more expensive than using BA if you are flying from GLA, and flying from GLA TO THE USA through LHR is usually cheaper than flying direct from LHR to the US....

    The problem is they have no short haul connecting flights so they have to fill their planes from the local catchment area. By the time you buy connecting flight with easy jet you have to add a bag and seats etc it is way more expensive than using BA if you are flying from GLA, and flying from GLA TO THE USA through LHR is usually cheaper than flying direct from LHR to the US. Norse should try linking up with easy to connect with GLA, EDI, MAN, NCL. Flew with Norwegian LGW-JFk. Nothing against them but I would rather fly a legacy carrier across the pond.

  3. John twomlow Guest

    Perhaps if they flew from other airports like Birmingham, instead of where every other airline flights from London they may do better

    1. John Macmillan Guest

      Yeah, totally agree. GLA and EDI. I would prefer direct with Norse than travelling via LHR with BA.

  4. Andy Diamond

    The only successful new entrant over the last 50 years or so, was Virgin Atlantic (VS). However, with a full service model and - importantly - a seasonally balanced network. From the beginning, they had a strong footprint in the Carribean, shifting some of the capacity seasonally.

    1. Tim Dunn Diamond

      Virgin Atlantic also fought and won to have a position at Heathrow airport not unlike what Southwest managed to do at Southwest. Airlines provide a service in a competitive market and both figured out how to get into the markets where "the big boys" played. Then each of them came w/ business plans that allowed themselves to expand in a highly competitive market
      Norse Atlantic and Norwegian before didn't get the first part right....

      Virgin Atlantic also fought and won to have a position at Heathrow airport not unlike what Southwest managed to do at Southwest. Airlines provide a service in a competitive market and both figured out how to get into the markets where "the big boys" played. Then each of them came w/ business plans that allowed themselves to expand in a highly competitive market
      Norse Atlantic and Norwegian before didn't get the first part right. They are still competing with much larger airlines that have the "location" piece much better figured out.

  5. Luxpete100 New Member

    A definition of madness is to keep doing the same thing but expect a different outcome. I don't understand how this airline ever got an operating license. It seems to use the same flawed business model as its bankrupt predecessor Norwegian. Even some of the senior managers are the same.

  6. ChurnieEls Guest

    Doesn't AerCap (the lessor to the initial 787s for Norse) have a ton of equity in the business hence the cheap lease rates?

  7. Paper Boarding Pass Guest

    If I'm flying across the Atlantic, it going to be an established airline (Euro or the Big Three). Those flying on the established airlines are more well grounded, have some type of allegiance (FF miles, credit card, business capacity agreement) which nurtures a repeat PAX.

    Norses is the airline I throw my son or daughter on as a cheap ass way to cross the Big Ditch. Here's your passport, backpack, phone with a Euro SIM...

    If I'm flying across the Atlantic, it going to be an established airline (Euro or the Big Three). Those flying on the established airlines are more well grounded, have some type of allegiance (FF miles, credit card, business capacity agreement) which nurtures a repeat PAX.

    Norses is the airline I throw my son or daughter on as a cheap ass way to cross the Big Ditch. Here's your passport, backpack, phone with a Euro SIM card, and strong boots. Back in the days of Freddy Laker, it was called the "Flip Flop and Backpack Crowd". What Norse lacks a is dedicated clientele. Instead, it's one-off PAX leveraging the price of a ticket. It takes consistency and repeat customers to make money in the long run, especially transatlantic.

    1. Chris Parker Guest

      I am hoping to go to the US in the next few months. I want to go Premium Economy and Norse makes sense.
      Sadly the Trans atlantic is a graveyard for low cost airlines, Laker,People's Express and Norwegian to name a few.
      I wish them well but the odds are not great

  8. John dachen Guest

    Laker, Highland Express, Norwegian, Norse, etc.
    Bye, bye now.

    1. N1120A Guest

      Laker should have survived

    2. Chris Parker Guest

      Laker had vision but also an ego. He bought loads of planes with not enough routes.
      Also the legacy carriers were out to get him

  9. D3kingg Guest

    Next summer ‘25 will be record demand as the World economies come out of recession.

  10. Frederik Guest

    The strong dollar will be hitting demand westwards across the Atlantic. So many who used to go to America are now going to the Middle East and Asia as it is so much cheaper than America. Especially for ordinary families Orlando and Florida are now well above most British holiday budgets.

    1. VladG Gold

      The dollar has lost 0,66% of its value vs. the Euro in the past 6 months and 2,53% in the last 12.

    2. Tim Dunn Diamond

      and esp. for transatlantic airlines, it is the strength of the dollar and the longer travel season that is making TATL networks work.
      All of the large European global airlines are in JVs with US airlines, are lining up to become affiliated w/ one of those carriers, or have figured out how to become viable on their own w/ a niche strategy.

      The same is increasingly true w/ Asian and Latin airlines that...

      and esp. for transatlantic airlines, it is the strength of the dollar and the longer travel season that is making TATL networks work.
      All of the large European global airlines are in JVs with US airlines, are lining up to become affiliated w/ one of those carriers, or have figured out how to become viable on their own w/ a niche strategy.

      The same is increasingly true w/ Asian and Latin airlines that recognize the power of connections to the big 3 global carriers - even though Asia and Latin America is much more Asian point of sale than to Europe.

      So, currency benefits swing both ways. Right now, Americans are traveling and the US economy is still stronger than most world economies.

      Norse Atlantic has to figure out how to participate in the market as it exists. Given that other airlines are making money, Norse Atlantic perhaps simply does not have any more viable of a strategy than Norwegian did.

  11. dn10 Guest

    If only they hired TD as CEO and tried to model their business around the world's best airline, Delta.

  12. vlcnc Guest

    The main problem is unbundled fares long-haul don't work, as invariably people can't really do without meals for that length of flight or luggage as people generally go for longer when going that far. Transatlantic flights are hyper competitive already bundled - the problem for Norse is frequently you can that for less after you add those things with them. There is no viable future for this model - hell I don't think unbundled service...

    The main problem is unbundled fares long-haul don't work, as invariably people can't really do without meals for that length of flight or luggage as people generally go for longer when going that far. Transatlantic flights are hyper competitive already bundled - the problem for Norse is frequently you can that for less after you add those things with them. There is no viable future for this model - hell I don't think unbundled service has much of a future in short haul even as even the cost of flying with low-cost carriers is risinng massively, when people pay much more, they expect a lot more.

    1. mdande7 Diamond

      It seems like you just made a case for why this would work better for long haul. You gotta check a bag, you gotta eat, you gotta drink so you will pay extra for those things and add revenue. What am I missing?

    2. vlcnc Guest

      The point is those things are bundled with fares on legacy carriers and work out cheaper - unbundling doesn't work out cheaper and why most people still fly with those airlines and why low-cost long-haul hasn't worked be it with Norwegian's previous operations, Norse's currrent, or AirAsia X's.

  13. Tim Dunn Diamond

    thank you for continuing to highlight stories regarding finances in the airline industry. As much as some resist hearing these details, a well-rounded discussion has to include finances.

    UA's CEO accurately noted several years ago that the global carriers and esp. US global carriers are in the best position they have been in for decades. The US did not lock down as aggressively, has a large domestic market which largely remained open after the first...

    thank you for continuing to highlight stories regarding finances in the airline industry. As much as some resist hearing these details, a well-rounded discussion has to include finances.

    UA's CEO accurately noted several years ago that the global carriers and esp. US global carriers are in the best position they have been in for decades. The US did not lock down as aggressively, has a large domestic market which largely remained open after the first few months, and the US, like many large economies, generously supported their airlines (huge amounts of money was pumped into economies so it wasn't just airlines).

    Labor costs have soared, low cost carriers didn't have the capital to get through the pandemic, and the legacies throughout the world are not willing to let low cost carriers or the Middle East airlines to take the share that they took in the last decade before covid. The developed market legacy carriers have the resources to add
    efficient capacity and can price to reduce leakage to non-legacy carriers. Add in, legacy carriers worldwide are largely profitable.

    So, the outlook for Norse Atlantic and others is grim. They will fight to survive as they should. Their chances of being sustainably profitable is unlikely.

    1. Eskimo Guest

      Full of fluff.
      But no bingo this round.
      Everyone's middle box "Delta" wasn't called.

      Better luck next time.

    2. George Romey Guest

      The big issue are labor costs because the ULCC are competing for the same labor pool, specifically pilots, with a limited number of individuals with the certifications/qualifications to do the job. ULCCs cannot support a pilot training program to bring in individuals with the potential to become a commercial pilot. ULCCs don't have the diversification of partner income and lucrative International premium fares. So they are stuck with higher costs but limited means to generate...

      The big issue are labor costs because the ULCC are competing for the same labor pool, specifically pilots, with a limited number of individuals with the certifications/qualifications to do the job. ULCCs cannot support a pilot training program to bring in individuals with the potential to become a commercial pilot. ULCCs don't have the diversification of partner income and lucrative International premium fares. So they are stuck with higher costs but limited means to generate revenue outside raising fares and fees are coming up with new fees.

    3. Tim Dunn Diamond

      very well said and accurate. (in contrast to the meaningless drivel that was posted above your comment)

  14. BC Guest

    They're also recruiting for more FAs in the USA, so I suspect that they think they'll be around for a while.

  15. Nikojas Guest

    Why not use these aircraft for winter sun to Canaries, Turkey or Dubai. Lots of demand and you can probably charge more per mile ticket price than across the Atlantic...

    1. Chris W Guest

      Because the European LCCs already service Canaries and Turkey and Norse isn't going to be cheaper than Ryanair or Wizz.

      Dubai could work because the LCCs don't fly there.

    2. W Gold

      Some European LCCs do fly to Dubai, but from secondary Eastern European cities. Norse could fly to DXB from London, Paris, Oslo, CPH, ARN, BER, etc.

  16. Chris W Guest

    I don't think why they don't shift their aircraft to popular winter sun destinations like Dubai, Bangkok, Bali and Cape Town between November and March.

  17. George Romey Guest

    It seems to me the typical ULCC flyer isn't one vacationing in Europe. And an airline like this isn't going to attract many business flyers. I therefore question the ULCC or even LCC (and yes the legacies are ULCC/LCC to a certain extent) business model on long haul International. I don't want the cabin specifics are but stuck in a 29 inch pitch seat without any IFE for 8 hours seems like a very unpleasant experience.

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Paper Boarding Pass Guest

If I'm flying across the Atlantic, it going to be an established airline (Euro or the Big Three). Those flying on the established airlines are more well grounded, have some type of allegiance (FF miles, credit card, business capacity agreement) which nurtures a repeat PAX. Norses is the airline I throw my son or daughter on as a cheap ass way to cross the Big Ditch. Here's your passport, backpack, phone with a Euro SIM card, and strong boots. Back in the days of Freddy Laker, it was called the "Flip Flop and Backpack Crowd". What Norse lacks a is dedicated clientele. Instead, it's one-off PAX leveraging the price of a ticket. It takes consistency and repeat customers to make money in the long run, especially transatlantic.

2
Tim Dunn Diamond

very well said and accurate. (in contrast to the meaningless drivel that was posted above your comment)

2
Tim Dunn Diamond

thank you for continuing to highlight stories regarding finances in the airline industry. As much as some resist hearing these details, a well-rounded discussion has to include finances. UA's CEO accurately noted several years ago that the global carriers and esp. US global carriers are in the best position they have been in for decades. The US did not lock down as aggressively, has a large domestic market which largely remained open after the first few months, and the US, like many large economies, generously supported their airlines (huge amounts of money was pumped into economies so it wasn't just airlines). Labor costs have soared, low cost carriers didn't have the capital to get through the pandemic, and the legacies throughout the world are not willing to let low cost carriers or the Middle East airlines to take the share that they took in the last decade before covid. The developed market legacy carriers have the resources to add efficient capacity and can price to reduce leakage to non-legacy carriers. Add in, legacy carriers worldwide are largely profitable. So, the outlook for Norse Atlantic and others is grim. They will fight to survive as they should. Their chances of being sustainably profitable is unlikely.

2
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